Target Markets

views updated May 21 2018

Target Markets

A target market is a group of customers with similar needs that forms the focus of a company's marketing efforts. Similarly, target marketing involves tailoring the company's marketing efforts to appeal to a specific group of customers. Selecting target markets is part of the process of market segmentationdividing an overall market into key customer subsets or segments, whose members share similar demographic characteristics and needs. Demographic characteristics that are analyzed for target marketing purposes include age, income, geographic origins and current location, ethnicity, marital status, education, interests, level of discretionary income, net worth, home ownership, and a host of other factors. A company wishing to focus its efforts on a well-defined market segment can select from among these characteristics the particular segments it wishes to target. For a small company, the act of identifying a target market and then working to satisfy the needs of that market is a sound basis upon which to build the business. For any company, making the most of marketing expenditures means getting the message to the intended audiencefocusing the marketing effort in such a way that it reaches and appeals precisely to the audience being targeted.

Target marketing can be a particularly valuable tool for small businesses, which often lack the resources to appeal to large aggregate markets or to maintain a wide range of differentiated products for varied markets. Target marketing allows a small business to develop a product and a marketing mix that fit a relatively homogenous part of the total market. By focusing its resources on a specific customer base in this way, a small business may be able to carve out a market niche that it can serve better than its larger competitors.

Identifying specific target marketsand then delivering products and promotions that ultimately maximize the profit potential of those targeted marketsis the primary function of marketing management for many smaller companies. For instance, a manufacturer of fishing equipment would not randomly market its product to the entire U.S. population. Instead, it would conduct market research, using such tools as demographic reports, market surveys, and trade shows, to determine which customers would be most likely to purchase what it offers. It could then spend its limited resources in an effort to persuade members of its target group(s) to buy. Advertisements and promotions could be tailored for each segment of the target market.

There are infinite ways to address the wants and needs of a target market. For example, product packaging can be designed in different sizes and colors, or the product itself can be altered to appeal to different personality types or age groups. Producers can also change the warranty or durability of the good or provide different levels of follow-up service. Other influences, such as distribution and sales methods, licensing strategies, and advertising media, also play an important role. It is the responsibility of the marketing manager to take all of these factors into account and to devise a cohesive marketing program that will appeal to the target customer.

Small business enterprises are also encouraged to continually examine their marketing efforts to make sure that they keep pace with changing business realities. For example, business start-ups typically accept any kind of legitimate business in order to pay the bills and establish themselves as a viable entity. But long after the start-up has blossomed into a solid member of the local business community, it may continue to rely on these early accounts rather than casting its net for more promising clients. "Are you happy with the makeup of your customer base and the nature of the work you do now?," asked Kim Gordon in Entrepreneur. "Altering the types of accounts you serve, their size, location or other criteria can have a big impact on your bottom line. Instead of letting your current customer base define you, use target marketing to determine who your next customers or clients should be." The process of redefining ideal clients and customers can be painstaking and time-consuming, for creating profiles of your new target audience necessitates extensive research into ideal prospects and the marketing measures that will be most effective in reaching them, as well as your own desires for your company's future direction. But for many small business owners, the effort is worthwhile. "By targeting your ideal prospects, you'll avoid detours and grow your business in all the right directions," wrote Gordon. "Soon you'll have the kind of company that matches your vision and grows increasingly profitable over time."

see also Advertising Strategy; Market Research; Market Segmentation


Burke, Colette. "Promotion: Identify Your Target Market." Farmers Guardian. 16 May 2006.

Gordon, Kim T. "Selecting the Best Media for Your Ad." Entrepreneur. September 2003.

"InsightWomen: Tying Down Inconstant Women." Marketing Week. 27 April 2006.

Madler, Mark R. "Firms Find Different Way of Targeting Latino Market." San Fernando Valley Business Journal. 24 April 2006.

Ries, Al, and Laura Ries. The Fall of Advertising and the Rise of PR. HarperCollins, May 2004.

Stafford, Marla R., and Ronald J. Faber. Advertising, Promotion, and New Media. M.E. Sharpe, October 2004.

                                   Hillstrom, Northern Lights

                                  updated by Magee, ECDI

Target Marketing

views updated May 18 2018


A target market is a set of buyers sharing common needs or characteristics that a company decides to serve. A company identifies a target market in order to organize its tasks and cope with the particular demands of the marketplace. Target marketing forms the foundation of a modern marketing strategy because doing it well helps a company be more efficient and effective by focusing on a certain segment of its market that it can best satisfy.

Targeting also benefits consumers because a company can reach specific groups of consumers with offers carefully tailored to satisfy their needs. To do so, a company has to evaluate the various segments and decide how many, and which ones, to target. There is no single way to segment a market. A company needs to research different segmentation variables alone and in combination with others to find its target market. Four main variables can be used in segmenting consumer markets: geographic, demo-graphic, psychographic, and behavioral segmentation.


Geographic segmentation calls for dividing the market into different geographic units, such as nations, regions, states, counties, cities, or neighborhoods. Many companies localize their products as well as their advertising, promotion, and sales efforts to fit the needs of individual cities, regions, and neighborhoods. For example, clothing stores sell clothes targeted to their geographic markets. In January, the Gap clothing store sells winter clothing in Portland, Maine, such as mittens, scarves, and winter jackets. A Gap located in Clearwater, Florida, will sell more T-shirts, shorts, and bathing suits.


Demographic segmentation divides the market into groups based on such variables as age, gender, family size, family life cycle, income, occupation, education, religion, race, and nationality. Demographics is the most popular basis for segmenting customer groups because consumer needs, wants, and usage rates often closely reflect demo-graphic variables. Even when a market segment is first defined using other factors, such as psychographic or geographic segmentation, demographic characteristics must be known in order to assess the size of the target market and to reach it efficiently.

Demographics is also the easiest and least expensive to retrieve because it is secondary data; that is, it comes from research that has already been conducted. For example, a target market for a real estate developer selling luxury vacation homes near Walt Disney World would include professional married couples approximately 30- to 45-years-old with young children, and with incomes of more than $100,000. Another example of targeting through demographics is Liz Claiborne Apparel Company. They have named their target market; her name is Liz Lady. They know Liz Lady's age, income range, professional status, family status, hobbies, and interests. Every decision from marketing to design is based on Liz Lady's profile.


Psychographic segmentation is the process of dividing markets into groups based on values, social class, lifestyle, or personality characteristics. Individuals in the same demographic group may fall into very different psychographic segments. Psychographic segmentation involves qualitative aspectsthe "why" component of consumer buying patterns. Therefore, a company must conduct its own research, which can become very time-consuming and expensive.

Marketers, however, are increasingly focusing on psychographic characteristics. An example of psychographic segmentation is that of the clothing retailer Abercrombie and Fitch. Abercrombie and Fitch has developed a powerful personality that is fun-loving, independent, and sexually uninhibiteda winning formula with teenagers and college students. To remain familiar with teen tastes and to spark ideas for new merchandise, Abercrombie and Fitch sends about thirty staffers to college campuses each month to chat with students about what they play, wear, listen to, and read. This kind of research led to success in the early twenty-first century with wind pants. (These resemble track-and-field pants but are generally made of nylon.) The stores themselves, featuring comfortable armchairs, are designed to be gathering places. They are staffed by high-energy "brand reps" recruited from local campuses and dressed in Abercrombie and Fitch clothes.


Behavioral segmentation divides a market into groups based on consumer knowledge, attitude, use, or response to a product. Many marketers believe that behavior variables are the best starting points for building market segments. Why does one consumer drink Coke, another Pepsi, and a third iced tea? Demographics and psycho-graphics can provide many clues, but it is often helpful to consider additional factors as well. Individuals act differently depending on their situation or the occasion for using the product. For example, a woman who shops only at discount stores for clothing may nonetheless think nothing of spending $100 on a bathing suit at a specialty shop for her Caribbean vacation. Some holidays, such as Father's Day and Mother's Day, were originally promoted partly to increase the sale of flowers, candy, cards, and other gifts. Many food marketers prepare special offers and ads for holidays. For example, Beatrice Foods runs special Thanksgiving and Christmas ads for Reddi-whip in November and December, months that account for 30 percent of all sales of whipped cream.


Identifying a target market allows marketers to develop strategies for designing, pricing, distributing, promoting, positioning, and improving their product, service, or idea. For example, if research shows that a sturdy recyclable package with blue lettering appeals to one's target market and if one is focused on that target market, that type of packaging should be chosen. If, however, marketers are product or profit orientedrather than people orientedthey might simply make the package out of plain Styrofoam because it protects the product (product oriented) or because it is less expensive (profit oriented). If one knows one's target market is 24- to 49-year-old men who like rhythm and blues, are frequent CD buyers, and live in urban neighborhoods, one can create an advertising message to appeal to those types of buyers. Additionally, marketers could buy spots on a specific radio station or television show that appeal to this type of buyer, rather than buying general media time to cover all the bases.

Many variables can be used to segment and select a target market. Practically any variablesuch as age, sex, product usage, lifestyle, or desired benefitcan be used to describe a target market. The number of target markets identified also depends on a marketing strategist's ability to be creative in identifying segments. Target marketing is especially important for specialty products and shops. Target marketing rests on the assumption that differences among customers are related to differences in the purchasing behavior.

see also Marketing ; Promotion


Clemente, Mark N. (2002). The marketing glossary: Key terms, concepts, and applications in marketing management, sales, advertising, public relations, direct marketing, market research, sales promotion. Glen Rock, NJ: Clemente Communications Group.

Kotler, Philip, and Armstrong, Gary (2006). Principles of marketing (11th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Edward Lowe Foundation. (2003). How to identify a target market and prepare a customer profile. Retrieved January 3, 2006, from

Small Business Administration. (2003). Target market. Retrieved January 3, 2006, from

Weinstein, Art (2004). Handbook of market segmentation: Strategic targeting for business and technology firms (3rd ed.). New York: Haworth.

Tatum Krause